Five reasons why membership is killing association business models: Part III

by Jeff De Cagna on July 31, 2012

Membership is perhaps the most sacred tenet in all of association orthodoxy. Indeed, for many organizations, the membership imperative defines the very existence of the association: membership is who they are and what they do. In a time of relentless societal transformation, however, the impact of forces beyond our control makes it necessary for us to question all of our most deep-seated beliefs, including our beliefs about membership.

In this three-part series, I am sharing five critical reasons why the continued emphasis on membership is “killing” association business models. If you have not done so already, I recommend you read Part I and Part II. Please share your ideas and insights in the comments below.

Reason #5:  Membership-centric business models require a significant investment of human effort for an insufficient return.

Associations use a variety of high-touch (and often more costly) methods to recruit and retain their members. Implementing these methods can be extremely time consuming for association staff and voluntary contributors alike, and ultimately may have only minimal impact. According to a recent study, associations (on average) had just a three percent increase in membership in the past year, and only a six percent increase in their five-year membership numbers. From a business model point of view, associations would be better served by devoting more of their human capabilities to the work of new value creation.

NEW DESIGN APPROACH:  Associations have invested time, energy and financial resources in building their capabilities for membership marketing and management. For some organizations, these investments have produced a meaningful return. For many others, however, the process of selling membership has become an all-consuming effort to persuade increasingly skeptical stakeholders to do something they seem otherwise unwilling to do. The work of business model innovation offers associations an opportunity to reconsider the narrow focus on membership in favor of more open and inclusive approaches to new value creation.

Closing thoughts

My purpose in presenting this series is not to suggest that membership is evil. I am not opposed to membership on moral grounds, nor am I arguing that associations will ever stop offering membership entirely. In the short-term, membership likely will remain a primary line of business for most associations. The vast majority of organizations will not be able to exit the membership business easily, and certainly not before they identify sustainable new revenue streams to replace membership dues.

At the same time, we need to challenge the orthodox belief that growing membership will be the primary driver of future association success. Senior association leaders who are deeply invested in the benefits of membership must honestly and soberly assess the overall impact of membership centricity–the positive as well as the negative–on the overall health of their existing business models, keeping three key points in mind:

1. Associations must confront the shifting economics of membership–Throughout most of their history, associations have benefited from lasting connections with loyal members, creating a level of resilience that has enabled the traditional association business model to endure during past periods of economic fragility and decline. At the same time, the emotional identification with members has rendered association business models maladaptive to the forces of relentless societal transformation, and their negative impact on the traditional membership value proposition. As a result, most associations continue to operate on closed “pay-to-play” membership models, even as the world continues to move toward more open models of simple, inexpensive and ubiquitous interaction, sharing and collaboration.

2. Associations must do more to honor their stakeholders’ expectations–When they were the only credible source of professional or industry information, networking and learning for their stakeholders, associations could determine the degree and pace of new value creation based solely on organizational needs. Over the last twenty years, however, the power to dictate the terms of new value creation has shifted away from traditional institutions and toward individuals collaborating through public platforms, self-organizing groups and distributed networks. As a result, today’s stakeholders have access to a far more diverse and meaningful set of options for finding valuable knowledge and relationships, a combination of both “good enough” and superior alternatives with which associations will compete more fiercely in years to come.

3. For associations, new value creation matters more than membership going forward–Association leaders looking ahead at the next two decades should realistically expect continued disruption and volatility for their organizations, the fields those organizations serve and for society as a whole. In the face of this unprecedented complexity and uncertainty, the stakeholders of the future are already thinking about how they will achieve their most important outcomes, and which relationships will deliver maximum support for success. Associations have a chance to be impact players in the years ahead if they can engage these stakeholders through business models that capitalize on the power of associating as an open and collaborative experience, without any required financial transactions or tests of fidelity, in order to dramatically accelerate new value creation.

Please sign up today for P.I.’s new Serious Questions electronic newsletter! The inaugural issue, to be released next month, will include access to new, unpublished content on the impact of membership on association business models.

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